Car insurance premiums set to rise

Motorists benefited from lower insurance premiums in the first quarter of the year, but experts predict more increases later this year.

According to the latest Confused.com/Towers Watson car insurance price index, the average cost of a new comprehensive policy fell by £3, or just 0.5 per cent in the first three months of the year, to £591.

Third party, fire and theft policies, typically taken out by younger drivers, also dropped marginally by £2, or 0.3 per cent, to an average premium of £964. This followed increases in premiums in the last two quarters and rises in five of the past seven months.

Steve Sanders, finance director at Confused.com, said the underlying trend for prices remained steadily upwards, with average comprehensive premiums having risen by £12 since the middle of 2014 and in five of the past seven months.

He put the slight fall in premiums down to insurers seeking to place themselves in a strong business position ahead of the peak new car registration and insurance renewal month in March.

"In five of the previous six years the first quarterly change has been less than that in the immediately preceding fourth quarter," he explained.

Data from Moneysupermarket.com supports these figures, showing car insurance premiums dropping year-on-year since 2011.

Kevin Pratt, insurance expert at Moneysupermarket, said car insurance premiums typically rise in March because of the introduction of new registration plates at the beginning of the month. "The sale of new cars and resulting increased activity in the second hand market stimulates demand for insurance, which allows insurers to increase their prices," explained Mr Pratt.

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